NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, July 7, 2015

The Kenyan government is introducing new regulations this week in parliament that could lead to the break-up of Safaricom, the country’s leading telecom company.

Fred Matiang’i, the cabinet secretary at the Ministry of Information, suggested that this is part of an effort to protect against monopolies. “Telecommunication firms need to be regulated to ensure some players are not strangled,” he said.

Safaricom, partly owned by the British mobile firm Vodafone, currently has more than 60% of Kenya’s 33 million mobile users.

If the new regulations pass parliament, Safaricom could be forced to separate its mobile money unit, M-Pesa, from its mobile phone services (voice and data) and infrastructure businesses, potentially weakening its position in the market. And it will mean victory for rival Airtel, which has long argued that Safaricom’s dominance is anti-competitive.

Last year, the Communication Authority of Kenya (CAK) ordered Safaricom to allow its mobile money agents to host services from other operators, who until then had refused to do so. Safaricom boasts 20 million subscribers on its M-Pesa platform. Analysts say this success has largely been built on the back of more than 83,000 agents the company has across the country.